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Sweep Account Disclosure

HilltopSecurities Inc. Sweep Account and Free Credit Balance Disclosure

Sweep accounts are a service provided by Hilltop Securities Inc. (“HTS”) to its customers offering you the option of transferring excess cash balances in your securities accounts to either (i) our Bank Insured Deposit (“BID”) program, which is an account at a participating bank whose deposits are insured by the Federal Deposit Insurance Corporation (“FDIC”), or to (ii) a money market mutual fund. A sweep of your excess cash allows you to earn interest on those funds while retaining the flexibility to quickly access that cash to purchase securities or withdraw it.

To participate in the sweep account program, you must select a sweep account product upon account opening by affirmative written consent. If you decline participation in the sweep account program, fail to make a selection by affirmative written consent, or if your account is otherwise ineligible to participate, your excess cash balances must be retained in an interest-bearing Securities Investor Protection Corporation (“SIPC”) insured credit interest program (“CIP”) account held at HTS. Unlike cash accounts, retirement accounts are required to participate in a sweep account program by selecting a sweep account product by affirmative written consent prior to account opening. Retirement accounts may not select CIP. For existing accounts, you should notify your financial professional if you wish to sweep cash balances to the BID program or a money market mutual fund, or if you wish to make a change in your current sweep product selection.

HTS is, and your financial professional may be, a member of SIPC, which protects securities customers of its members against the loss of cash and securities up to $500,000 (including a $250,000 limit for claims for cash). An explanatory brochure is available at www.sipc.org or by calling 202.371.8300. In addition, HTS has purchased Excess SIPC Insurance which covers the net equity of customers’ accounts up to an aggregate of $200 million from underwriting syndicates at Lloyd’s of London.

The customer securities component, which restricts coverage with respect of any one customer, will be a maximum of $25,000,000 with the aggregate coverage of cash set at $900,000.

SIPC and Excess SIPC covers accounts of the member firm in the event of a member’s bankruptcy or insolvency. Coverage does not apply to losses due to market fluctuation or to any decline in the market value of your securities.

It is important that you understand the unique nature, insurance coverage and risk associated with each type of account and account category. SIPC coverage does not protect cash balances created and maintained solely for the purpose of earning interest, so funds in money market or CIP accounts must be intended for future reinvestment.

HTS may temporarily suspend or discontinue the sweep arrangement at any time without advance notice to you. HTS may change your sweep account terms and conditions, or change the timing or frequency of the sweep, by giving you thirty (30) days prior written notice to the extent possible. If HTS fails to sweep your excess cash balances in the manner described in the Customer Information Brochure, HTS’ liability is limited to the actual amount of the dividends or interest you would have earned had the sweep been performed. HTS may automatically sweep funds from your sweep account to your brokerage account anytime without advance notice to you to pay for securities transactions and withdrawal requests, satisfy a debit balance, settle any other obligation you owe HTS, pay your margin loan, provide necessary collateral in your margin account, or for any other permissible purposes. Should you wish to access these funds or information regarding the fund rates, please contact your financial professional. With ongoing changes to the rates of return for the available sweep options, your personal financial circumstances and market conditions, you should always consider all of your investment options.

Bank Insured Deposit Program

The BID program is an FDIC-insured account that sweeps excess cash to participant banks in increments of $250,000, to achieve FDIC insurance coverage up to $5 million per account owner (for an individual account) or up to $5 million per each individual owner of a joint account (e.g., for a joint account with two individual owners – up to $10 million), depending on the number of participant banks in the program.

The FDIC insures bank deposit accounts such as checking, interest-bearing checking and savings accounts, money market deposit accounts, and certificates of deposit (CDs) if an insured bank or savings association fails. Your bank deposits are generally insured up to $250,000 per account owner, while your IRA and other qualifying self-directed retirement funds on deposit are separately insured up to $250,000. The FDIC does not insure the money you invest in stocks, bonds, mutual funds, life insurance policies, annuities, or municipal securities, even if you purchased those products from an insured bank. Previously existing or additional bank accounts at the same bank may affect your insurance coverage. If your funds on deposit at any one bank exceed the applicable FDIC insurance limit of $250,000 per account owner ($250,000 for qualifying retirement accounts), the FDIC will not insure your funds in excess of the limit. If you have a deposit with one of the participant banks that is separate from a balance in the BID, you should notify your financial professional if the combined deposits are in excess of $250,000 and such excess funds will be placed with another participant bank, if available. Additional information regarding FDIC coverage is available at www.fdic.gov. Please consult your financial professional, as certain types of accounts may not be eligible to invest in the BID.

For a list of Bank Insured Deposit participant banks, please see Schedule A below.

For the Bank Insured Deposit Terms and Conditions, please click here: BID Terms and Conditions

The BID program pays different rates of interest based on five different deposit tiers. The amount of interest paid will be determined by the amount of interest paid by the banks participating in the program, minus the amount of fees charged by us, as broker-dealer or custodian.

BID Program Current Rates as of August 2, 2022

Tier
Deposit Level
Annual Percentage Yield*
Tier 1
$0 to $49,999.99
0.30%
Tier 2
$50,000 to $249,999.99
0.40%
Tier 3
$250,000 to $499,999.99
0.50%
Tier 4
$500,000 to $999,999.99
0.60%
Tier 5
$1,000,000 or more
0.85%

*  The annual percentage yields are subject to change without notice.

The applicable interest rate tier will be determined based on the amount of cash available in your brokerage account on a per account basis. Cash available in one brokerage account will not be aggregated to include cash which may be contained in other brokerage accounts you hold with us for purposes of qualifying for a higher interest rate tier. In other words, the amount of cash available in each specific brokerage account can only be used to qualify for one individual interest rate tier under the BID program.

Interest on funds in a BID account is accrued daily, compounded monthly and credited to your account monthly. Interest begins to accrue on the date of deposit in the bank up to, but not including, the date of withdrawal. The daily balance method is used to calculate the interest on these accounts. The daily rate is 1/365 of the interest rate. Account rates are set in accordance with other bank products and may be changed at any time. The rate of return paid on BID funds may vary from the rates of return available to depositors making deposits with the bank directly, through other types of accounts at your financial professional, or with other depository institutions in comparable accounts. The bank deposit account may be more profitable to HTS and its affiliates, than other available sweep options. You should compare the terms, rates of return, required minimum amounts, charges and other features with other accounts and alternative investments.

We anticipate receiving fees, including fees for administrative services, and other financial benefits for providing sweep funds on deposit with the BID program.

Money Market Funds

Money market mutual funds, which may also be available as customer selected sweep options, are treated as securities and are registered with the Securities and Exchange Commission, pursuant to the Investment Company Act of 1940. Certain types of accounts, including corporations, partnerships and employee benefit plans, may not be eligible to invest in the funds. Please consult your financial professional for additional information. We anticipate receiving fees or other financial benefits based on your sweep account balance. For money market funds, those benefits include annual payments based on the amount you invest in the sweep account. Please note that shares in a money market fund are not FDIC-insured, not guaranteed by the Federal government, and are not deposits or obligations of any bank or guaranteed by any bank. There can be no assurance that a money market fund will be able to maintain a stable net asset value of $1 per share. Tax-exempt money market funds may be subject to the alternative minimum tax. See the money market fund prospectus for more complete information, including terms, management fees, prevailing rates and expenses. You can obtain a prospectus by contacting your registered representative. You should consider the fund's investment objectives, risks and expenses carefully before investing.

Money Market Funds Current Rates
Money Market Fund Symbol 7-Day Yield Annualized*
Federated Hermes Prime Obligations PTAXX 1.91% (as of 8/1/2022)
Dreyfus Government Cash Management DGVXX 1.86% (as of 8/1/2022)
Dreyfus National Municipal Money Market GTMXX 1.18% (as of 8/1/2022)
Dreyfus Treasury Obligations Cash Management DTAXX 2.08% (as of 8/1/2022)
Dreyfus Treasury Securities Cash Management DVRXX 1.76% (as of 8/1/2022)
Federated Hermes California Municipal Cash Trust CACXX 1.12% (as of 8/1/2022)
Federated Hermes New York Municipal Cash Trust NISXX 1.45% (as of 8/1/2022)

* The 7-day yield and annual percentage yields are subject to change without notice.

Free Credit Balances

Free credit balance refers to the amount of cash held in your account resulting from sales of securities, dividends, interest, deposits or otherwise, which is free from any withdrawal restrictions. Free credit balances are held by HTS and are payable to you on demand. HTS uses your and other customers’ free credit balances to earn interest and other compensation, to the extent permissible under Rule 15c3-3 of the Securities Exchange Act of 1934.

HTS considers free credit balances to be temporarily held in your account for the purpose of reinvestment or otherwise being held awaiting investment. HTS may, but is not required to, pay you interest on your free credit balances. As such, free credit balances should not be held by you solely for the purpose of earning interest. You are responsible for monitoring your free credit balances to determine whether a sweep program offered by HTS would be more appropriate for you.

Free Credit Balance Current Rates
As of August 2, 2022

As of August 2, 2022, HTS pays interest on free credit balances at a rate of 0.40%.

Interest is calculated daily based on the free credit balance in your account as of the close of business the prior business day. Interest is then credited to your account on a monthly basis.  Interest rates are subject to change at any time and without notice based on a number of internal and external factors including current market conditions, interest rates, and other market factors.

For more information on how HTS is compensated, please see  the Customer Information Brochure (available by clicking here:  Customer Information Brochure).

Schedule A
List of Participant Banks

HTS contracts with Total Bank Solutions, LLC to provide administrative services for the BID. Current banks in BID, including those banks with which HTS is in negotiations to enter the BID, include:

*PlainsCapital Bank, an affiliate of HilltopSecurities

Amerant Bank, N.A.

Androscoggin Savings Bank

Bank of East Asia

Centennial Bank

Citibank N.A.

ConnectOne Bank

East West Bank

Evolve Bank & Trust

Farmers & Merchants State Bank

First Bank & Trust

First Bank NJ

First Credit Bank

*Forbright Bank

Manufacturers Bank

Merrick Bank

New York Community Bank

Pacific Western Bank

Peapack-Gladstone Bank

Pinnacle Bank

*Poppy Bank

Sandy Spring Bank

Sterling National Bank

Third Coast Bank SSB

*,#TriState Capital Bank

Truist Bank

United Community Bank

Western Alliance Bank

*Denotes a bank which receives priority in meeting and maintaining its target BID balances for overnight deposits and/or term deposits.

#Denotes a bank in which Hilltop Securities Inc. maintains a reserve account.

Please note if you have deposits held directly with one of these participant banks, that balance is separate from the balance in HTS’s BID program. Please notify your financial professional if the combined deposits are in excess of $250,000.

 

Revised 9/23/2022

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